How to protect your household finances
Financial uncertainty feels inevitable amidst the current political unrest and the recent shocking events across the world. Pairing this with our ever-changing, cyclical economy means it may be a case of when will the next financial downturn will hit, not if.
With that in mind, the experts at moneyguru.com have compiled a list of helpful tips on what to do to protect your household finances from disruption.
Build a safety net
Sometimes also known as a "rainy day" fund, a safety net is generally a stash of money held in a savings account earmarked for unexpected events like losing your job or emergency house and car repairs. There is no hard and fast rule about how much to save each month but the general thought is that you should have enough to cover your finances for between three to six months. However, it’s safe to say that some savings are better than none so add ‘nest egg’ to your financial checklist today.
Check your credit rating
In 2016 a report showed that 53% of UK households have never checked their credit score** or obtained a credit report. If you know what your credit score is and what that means to lenders, you can work out how to improve it over the next year. Your credit score can affect everything from mortgages and car insurance to getting a job, so you need to make sure it’s as healthy as possible.
Invest in things
Are you a classic car fan? How about an art critic in the making? Invest your money in real things; they have intrinsic value so inflation doesn’t hurt them. During an economic crisis, many people think alternative investments have gone up in value, when in fact it is the value of money that has fallen.
You can offset money worries by investing in property because can borrow to buy and you could have an additional income stream from rent too!
Make paying your debts as easy as possible
There’s a lot more going on in your life than trying to make the books balance. Work and family life can take up all of your energy, leaving little time for anything else. As well as credit card consolidation, set up direct debits for bills and savings so you don’t need to remember to pay them each month. This easy trick means you won’t miss payments and rack up expensive penalties which will damage your credit score.
Keep it simple
If you’re spending all your time on complicated finance juggling, you could forget about the big picture. Remember the most important thing is to live within your means – spend less than you earn and invest the difference. If you stick to this basic principle, everything else should fall into place, and you’ll have more time to be clever about your investments and prepare for the future.
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Updated on 8th December 2017